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Liquidation rate at historic lows

17 May 2011

There have been lots of statistics coming out recently.  The employment rate (up), the number claiming jobseekers allowance (up),  CPI Inflation up to 4.5%,  House prices (down a little).  What are we to make of it all.  However, one interesting figure to come out of the insolvency statistics has been the liquidation rate.  At just 0.75% of registered businesses this is an historic low.  Of course, more people are setting up businesses these days to try and keep themselves gainfully busy and to adapt to the uncertain job market.  But, it looks as if another reason is that the banks are less inclined to call in their debts and force an insolvency process.  In the Bank of England's Inflation Report they said that at nearly 1.5 per cent of all loans to non-financial private-sector companies, the write-off rate by the banks is at its highest since the UK emerged from the deep recession of the early nineties. Mind you for small businesses some banks are taking a tougher line. 

The banks might be being lenient but we are seeing a tougher line coming out of HMRC as they are less keen to agree time to pay arrangements and the timescales allowed to repay tax is getting shorter.  6-9 months in some cases.  Again the fact that the banks are mostly owned by the tax payers is probably a factor.  Good cop, bad cop....?

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